10/15/2003 11:00PM

State takes first step into era of slots

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Vernon Downs, the upstate New York harness track that has been on the brink of extinction for nearly a decade, will open its doors to a new era in the state's horse racing industry next month.

Vernon will become the first racetrack in the state to take bets on video-lottery terminals - a type of slot machine administered by the state lottery - when it opens a plush, 34,500-square-foot facility that will house 1,081 of the machines. The casino, adjacent to the track's grandstand, is expected to open in early November.

Vernon is one of eight New York racetracks that have been approved for slot machines. Five other harness tracks are expected to operate casinos, and two Thoroughbred tracks - Aqueduct in Queens and Finger Lakes in upstate New York - are planning to install thousands of the machines, perhaps as early as the first quarter of next year.

The revenue from slots promises to enrich purses for horse races, fatten the wallets of track owners and their casino contractors, and push hundreds of millions of dollars into state coffers. Vernon Downs, for example, is expecting the machines to take in $80 million in wagers and attract up to 1 million people a year to its namesake town, population 1,200.

The original legislation authorizing slots at New York racetracks passed in late 2001, but most racetracks disagreed with the revenue splits and took issue with several restrictions in the law. Since then, racetracks, legislators, and the lottery have worked together to hammer out compromises on most of the financial and operational issues, and most tracks have said the law is at the least satisfactory.

At Saratoga Raceway, where a 1,300-machine casino is expected to open in January, track officials estimate that because of slots revenue purses for horsemen will double in 2004, from $20,000 to $40,000 a day. In 2007, the track expects to give out $120,000 in purses each day, a 500 percent increase over 2003.

"We believe that in three years, New York harness racing will be the best in the country, better than Ohio or New Jersey," the two states that lead the country in purses for Standardbreds, said John Leonard, a spokesman for Saratoga Raceway.

But those numbers pale in comparison to what is expected at Aqueduct. The 4,500 machines that have been approved for the track - which would give the track the most machines of any facility on the East Coast - are expected to each take in at least $300 in win receipts per machine per day, for annual revenues exceeding $500 million. At least initially, horsemen would get 7.5 percent of that figure, which could provide a $150,000 boost to purses each day.

Aqueduct's plan to build a casino in its grandstand has been put on hold indefinitely, however, due to lingering concerns that New York Racing Association officials could be indicted by the federal government on charges related to the convictions of 19 of its mutuel tellers in the past three years for income tax evasion and money laundering. Until the federal issues are resolved, construction on the casino will not go forward, according to Barry Schwartz, the chairman of NYRA.

"Where do we stand right now?" Schwartz said Wednesday. "We are standing still. The U.S. attorney has to reach a decision, and until then, we can't do anything."

NYRA's partner in the casino project, MGM Mirage, pulled out of the partnership in August, citing the U.S. attorney's involvement. But the company will recommit to the project if the case is dropped, Schwartz said.

If and when the U.S. attorney's office makes its intentions clear, it will take NYRA at least six months to finish the construction at Aqueduct and put the machines on line, Schwartz said. So the absolute earliest that Aqueduct will begin taking bets on the machines will be in early summer of 2004.

Finger Lakes Race Track, 20 miles southeast of Rochester, also plans to have a casino up and running in early 2004, according to reports. The track is expecting to spend $10 million on renovations to the grandstand to allow the installation of 1,010 machines.

Purses are expected to rise from $75,000 a day to $125,000 a day with revenues from the machines, track officials have said. Finger Lakes officials did not return phone calls requesting comment on the plans.

Video-lottery plans at other harness tracks are in varying stages of development. Monticello Raceway, in the Catskills, has submitted plans to the state lottery board for a 100,000-square-foot addition that could open as early as February. The track has been allotted about 1,800 machines.

Buffalo Raceway in far western New York has been approved for just under 1,000 machines, and Yonkers Raceway just north of New York City has been approved for 2,000 machines, the second-largest allotment in the state. Batavia Downs, midway between Rochester and Buffalo, has not had an allotment approved yet, according to Carolyn Hapeman, a spokeswoman for the lottery.